Wholesale/transport services

Analysys Bashes Broadband Regs

Regulation does not a broadband market make. Despite a goal of massive deployment, regulators in both the U.S. and Europe lack the vision needed to get there, warns a recent Analysys report (see Analysys: Broadband Regs Lack Vision).

Lots of regulatory decisions are being made: Recent rulings include the Federal Communications Commission (FCC)'s February decision to deregulate the technology completely in the U.S., removing the wholesale-priced access competitors have (until now) been granted to incumbent local loops (see Powell Loses FCC Vote). In Europe, governments are gearing up to comply with a July deadline to harmonize broadband expansion throughout the EU, and to ensure that incumbents open their networks to competition.

What these and other measures fail to take into account, according to the report, entitled "Regulating the Telecom Markets," is that mass deployment of broadband infrastructure is stuck on the basics. A ruling may be in place, but getting the fiber to implement new services remains problematic in many cases.

For example, according to report co-author Ross Pow, Analysysys identified more than 300,000 business sites in the U.K. last year that could justify using fiber, but that didn’t have access to it.

Regulation may even hinder the process of broadband rollouts. That's because the basic infrastructure, the ducts and cables on which broadband services rely, aren't always easily provisioned. Ducts and cables are constrained by geography, architecture, and security considerations, and are very civil engineering-intensive, the report states.

In many cases, these forces converge to hinder the introduction of new links. While a ruling may open the way for different companies to build multiple competing networks in a single location, that often isn't feasible: "For certain geographical areas it’s only economically viable to have only one access run," Pow says. "Where competition delivers the infrastructure, that’s great. But regulators can’t rely on that happening."

So what should regulators do when they realize that competition is not going to help bring broadband to an underserved area? Pow says there are a number of ways they can help bridge the technology gap:

  • Work through direct subsidies to companies willing to build in underserved areas.
  • Partially fund a project, promising a certain amount to a company willing to build the infrastructure. In these cases, the government would typically put a bid out on the project.
  • Allow one company to act as a heavily regulated quasi-monopoly.
  • Cut out the middlemen and lay the fiber themselves.
  • Deploy broadband aggregation, in which all public services in an area band together to buy their broadband services from one provider.

"In the European market, broadband aggregation could almost double the level of coverage in certain rural areas. I would expect a similar situation to apply in the U.S.," Pow says. He admits, however, that all the different initiatives "are generally in pretty early stages, [so] it’s hard to say how successful they will be."

Pow envisions a model for broadband services in which broadband applications represent the upper layers, while ducts and cable reside at the base. "The main thrust of our report is that competition is great at increasing innovation," he says. "At the lower layers, however, the economics of broadband are more like [those of] a utility… It’s about basic infrastructure."

Although it’s still unclear what the best method may be to entice businesses to build out the lower layers, Pow says that the FCC's recent deregulation order certainly isn't it (see Will RBOCs Spend More on Broadband? and Covad CEO Sticks to His Guns). "Where infrastructure is already there, it should be made as widely available as possible," he says. "Basically, what you need is to ensure competition at the higher layers by providing access to the lower layers on an equitable basis."

— Eugénie Larson, Reporter, Light Reading

rjmcmahon 12/5/2012 | 12:18:31 AM
re: Analysys Bashes Broadband Regs Coming up with a win/win information utility plan for both privileged and underprivileged communities is no small task. Government will have to be involved (and Chairman Powell's concern of his "Mercede's divide" will have to be overcome.)

The privileged communities are afraid to deploy real broadband for a few a reasons. First, they are worried that they may be committing their rate payers to flawed assumptions, which include things like technology selections, labor rate assumptions, community take rate assumptions, and legal concerns. The feds could help by offering some support with these issues.

Also, maybe an insurance company could be created to back the bonds which fund our new utility infrastucutre. The criteria for the federally bakced insurance program would be things like a pure fiber infrastructure which enables open access bandwidth abundance, and no poaching allowed by the telco or cable cos. Let them go into bankruptcy where they belong.

Mr. Buffett could oversee this new insurance company. But this time, instead of pocketing the profits for himself, he would be obligated to spend those profits on democratic fiber in underprivileged communities. Setting such an example may even make Citizen Gates take notice. And with a little good luck (or a lot of shame), the friends of Frank wouldn't be too far behind ;-)
MikeBroadband 12/5/2012 | 12:18:30 AM
re: Analysys Bashes Broadband Regs It is a lack of vision that will mean that it will take decades until we get mass availability on true broadband. That is the same for us in the US and for Europe and all others.

Not until cities, counties, states and government start to view true broadband access as a utility will anything serious happen. Until then we-¦ll have to live with poor cable and adsl connections.

LightProphet 12/5/2012 | 12:18:29 AM
re: Analysys Bashes Broadband Regs Let alone the standards of reporting, looks like even correct spelling of the headlines seems to be too much to expect!

Don't you guys even spellcheck?
opticalwatcher 12/5/2012 | 12:18:27 AM
re: Analysys Bashes Broadband Regs
"Don't you guys even spellcheck?"

"Analysys" is a company.
rjmcmahon 12/5/2012 | 12:18:26 AM
re: Analysys Bashes Broadband Regs It is a lack of vision that will mean that it will take decades until we get mass availability on true broadband.

The vision is getting better from what I can tell. The challenge ahead of us is one of execution combined with a little faith and lot of luck.
wei48221 12/5/2012 | 12:18:22 AM
re: Analysys Bashes Broadband Regs 1. Have the government charges the operators (teleco, cable) for building their cable ducts under public space (road, bridge, etc.). The fund can be use as the seed to finance the construction of a utility-like broadband infrastructure or to make up imcome shortfall(as in 2);
2. Grant concession (for a period of time, say 30 years) to a company to build cable ducts and fiber cables (this could be FTTB or FTTH) - this would get rid of government's problem of inefficiency and other troubles (budget, regulations, etc.);
3. The concession company gets its investment back by renting its infrastructure to other operators (the government could use "stick and carrot" to help boost the take rate) ;
4. If there is any income shortfall, the money gathered in 1 could be use to make up the deficiency.
5. The government gets the infrastructure back at the end of the concession period and runs it by itself or a contractor (this could generate income for further build-out and/or to cover maintenance, operation costs).

Any opinion?

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